Annual Report2020

This year has been challenging for our associates, our members, the nation, and the world. News of a vaccine brings hope that a return to normalcy is on the horizon; until then, we will continue working to keep our members and associates safe while providing the financial services our members and our community need.

We are pleased to report that we offered loan repayment assistance to many of our borrowers. Many members have benefited from his-torically low mortgage rates! Earlier this year, late fees on loans and early withdrawal penalties for certificates were waived. One bright spot in 2020 was that savings and checking balances grew as many members banked their stimulus checks and benefited from reduced discretionary spending.

JAXFCU continued to make a meaningful contribution to the commu-nity during the COVID-19 pandemic. To assist the community, we reg-ularly appeared on Channel 4’s morning news to share financial tips and information to remain economically prepared. In the early days of the outbreak, masks were in short supply for healthcare workers. We were proud to form a coalition with Ascension and Baptist Hos-pitals and four other local credit unions to provide funding for masks manufactured by the Jacksonville-based company Rethreaded. Ad-ditionally, we donated funds to the Boys’ and Girls’ Club of Northeast Florida for school supplies and sponsored Motivation Mondays with Making Strides for Breast Cancer. Our Associates contributed funds to The HEAL Foundation benefitting programs for Autism, First Coast No More Homeless Pets, and The Leukemia and Lymphoma Society of Jacksonville.

In 2020, we also expanded financial inclusion by identifying ways to make common financial services more broadly available. In Novem-ber, JAXFCU launched a new short-term loan called QCash as an alternative to predatory payday lending. QCash requires no credit check and instead is based on our member’s history with us.

We are committed to taking first-rate care of our members and our associates and have exciting things planned for 2021. Your feedback on what we are doing well and where improvements are needed is appreciated. As we look to 2021, our member-owners can help the cooperative by considering us first for their financial service needs.

At your service, Mary Svoboda Interim President & CEO

INTERIM PRESIDENT’S MESSAGE

MARY SVOBODAInterim President and CEO

OUR VISION

To become our members’ first choice through advoca-cy, innovation, and service.

OUR MISSION

Jax Federal Credit Union exists to encourage the financial wellness of our membership.

OUR VALUE PROPOSITION

We take the hassle out of financial services. We make it easy for our members.

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CHARLES T. MCLEODChairman of the Board

JAXFCU EXECUTIVE TEAM

MARY SVOBODA Interim President & CEO

TAMARA BYRDChief Financial Officer

BRIDGETT LOAFMANChief Human Resources Officer

ANGIE COLEMANChief Marketing Officer

MANISH KOTHARIChief Information Officer

ADAM MCGOWANVP of Retail Operations & Sales

JILL THOMAS-AVILESVP of Payments &

Deposit Operations

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MESSAGE FROM THE CHAIRMANThe Board of Directors would like to say a sincere thank you to our loyal members and associates. We are proud of our associates’ dedication to serving our members each day, but es-pecially during the COVID-19 pandemic. We thank our members for supporting our associates and adapting to changes due to social distancing awareness. This has resulted in more self-ser-vice transactions and many members utilizing digital alternatives, some for the first time.

While 2020 has been a year of disruption, the credit union has successfully moved forward with planned initiatives to support our Digital Transformation strategy. This year, we launched a new online loan application system followed by online account origi-nation and funding.

In June, we upgraded our debit card system as a first step to-ward providing our members with an improved online and mobile banking experience. The Board approved a new state-of-the-art digital banking system slated for April of 2021. The goal is to provide members the ability to handle their financial business anywhere and at any time. With that said, we remain committed to offering exceptional personal service when visiting our branch-es or over the phone.

Earlier this year, after the departure of our CEO, the Board of Directors asked members of the Leadership team to assume new duties while the nationwide search process for a new CEO is underway. We want to thank the team for their continued focus on serving our member-owners, caring for our associates, and strategically thinking how best to improve people’s financial lives.

Charles McLeod, Chairman of the Board

STATEMENT oF FINANCIAL CONDITION

ASSETSAs of

June 30, 2020As of

June 30, 2019

Cash $5,565,496 $4,633,466 Investments:Available for Sale $13,098,850 $19,045,849 Other $83,486,702 $48,129,277 Loans to members, net of allowance for loan losses $333,790,201 $307,991,980 Other Receivables $9,794,093 $10,348,466 Accrued Interest receivable:Investments $60,867 $140,074 Loans $968,264 $749,347 Prepaid and Other Assets $5,647,086 $2,660,826 Property and Equipment, net $8,398,595 $7,061,542 NCUSIF deposit $3,446,785 $3,250,851

Total Assets $464,256,939 $404,011,678

LIABILITIES

Member's share and savings accounts $398,145,245 $346,400,451 Accounts Payable $4,032,518 $5,397,097 Interest Payable $184,111 $165,427 Borrowed Funds $14,214,286 $6,142,857 Other Accrued Liabilities $1,040,211 $889,672

Total Liabilities $417,616,371 $358,995,504

MEMBERS’ EQUITY

Regular Reserve $9,193,682 $9,193,682 Undivided Earnings $37,334,317 $35,815,116 Accumulated other comprehensive income $112,569 $7,376

Total Members’ Equity $46,640,568 $45,016,174

Total Liabilities and Members’ Equity $464,256,939 $404,011,678

+14.9%Increase in

Total Assets

+8.4%Increase in

Loans to Members

+3.6%Increase in

Member’s Equity

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On behalf of Jax Federal Credit Union’s Board of Directors, I am pleased to share the Annual Treasurer’s Report with our membership. Over the twelve months ending June 30, 2020, total loans to members in-creased by 8.4% to $333 million. Members’ deposits grew 14.94% to $398 million. Members’ equity grew at a slower pace, 3.61%, due to reductions in net income from the Federal Reserve’s decision to lower interest rates in March. Total Members’ Equity as of June was $46.6 million. Strong deposit and asset growth in 2020 reduced the net worth ratio to 10.04%, still well above the 7% required to be well-capital-ized. Finally, the five-year trends for Member Equity, Loans, Deposits, and Assets are positive, showing consistent year-over-year improvement. As of June 30, 2020, JAXFCU had $464 million in assets.

While Jacksonville’s economy has fared well compared to the nation, we are mindful that some members are having financial difficulties. These concerns and the impact of the low-interest-rate environment will likely put pressure on revenue for the next few years. The Management Team and the Board of Directors will continue to monitor the economy and adjust as needed.

Patrick O’Neill, Secretary/Treasurer

TREASURER’S MESSAGE

STATEMENT oF INCOME

INTEREST INCOMEAs of

June 30, 2020As of

June 30, 2019

Loans to Members $15,884,944 $14,381,959 Investments $873,173 $1,434,022

Total Interest Income $16,758,117 $15,815,981

INTEREST EXPENSE

Total Interest Expense $2,339,463 $1,857,305 Net Interest Income $14,418,654 $13,958,676 Provision for Loan Losses $2,342,179 $1,824,672

Net Interest Income after Provision for Loan Losses $12,076,475 $12,134,004

NON-INTEREST INCOME

Fees and service charges $1,963,754 $2,159,550 Miscellaneous Operating Income $4,448,546 $3,373,006

Total Non-Interest Income $6,412,300 $5,532,556

$18,488,775 $17,666,560

NON-INTEREST EXPENSECompensation and Employee Benefits $9,195,890 $7,969,764 Office Operating Cost $2,990,228 $2,959,144 Other Expenses $4,783,456 $4,474,009

Total Non-Interest Expense $16,969,574 $15,402,917

Net Income $1,519,201 $2,263,643

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Patrick O’NeillSecretary/Treasurer

Bruce DickinsonVice Chairman

Rodomir DésirDirector

Charles T. McLeodChairman

2020 BOARD oF DIRECTORS

COMMUNITY INVOLVEMENT

Joseph W. SharpDirector

C. Eugene WorthDirector

AWARDS & RECOGNITION

The Jacksonville Busi-ness Journal recognized

JAXFCU with a 2020 Community Impact

Award.

Jax Federal Credit Union was recognized for the fourth year in row with

the America Saves Des-ignation of Savings Ex-

cellence. America Saves Week was held February

24-28, 2020.

JAXFCU was one of only five credit unions recognized among the

350 financial institutions that participated in Amer-ica Saves Week, and the

only recipient head-quartered in Northeast

Florida.

ANNUALSCHOLARSHIP

We awarded a $1,000 Scholarship to JAXFCU

member, Dedrick Canady. He is a current student at the University of Central Florida, pursuing a bach-elor’s degree in finance.

Directors EmeritusErnest Webster

Jimmy HicksR. Scott PreacherDonald W. Bottin

Christine F. Conner

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Jax Federal Credit Union’s associates chose local or-ganizations to donate to during 2020. Contributions were made by employee donation and in-branch fundraising.

• The HEAL Foundation $4,374

• First Coast No More Homeless Pets $4,374 + donations

• Light the Night $4,374

• Making Strides Against Breast Cancer “Motivational Mondays” online social campaign $2,500

• Riverside Avondale Preservation $1,500

• Boys & Girls Club school supplies $500

• Rethreaded Masks (Co-Op with other area credit union’s) $2,000

$19,622Total $$$ Donated

SUPERVISORY COMMITTEE MESSAGE

Jax Federal Credit Union’s (JAXFCU) Supervisory Committee made up of volunteer members who independently evaluate the strength as well as the safety and soundness of JAXFCU’s operations and activities.

The Committee’s primary emphasis is to ensure the following:

• An independent audit is performed annually;

• Account balances of the membership are verified;

• Adequate policies and procedures exist and are complied with to protect the credit union’s resources;

• Governing regulations are properly adhered to; and

• The financial statements accurately reflect JAXFCU’s results of operation.

The Supervisory Committee collaborates with the Director of Internal Audit, the Board of Directors, the President & CEO, and employees of JAXFCU to ensure that the credit union’s assets are safeguarded by upholding policies, procedures, and regulatory requirements. The Supervisory Committee retained the services of Ewart & Associates, CPAs, to perform an audit of JAXFCU’s financial statements. Ewart & Associate’s annual audit of JAXFCU’s financial statements ensures that they represent fairly, in all material respects, the financial position and results of operations of Jax Federal Credit Union in conformity with U.S. Generally Accepted Accounting Principles. The Supervisory Committee has again determined that Jax Federal Credit Union is a strong financial institution. We thank the Board of Directors, management, and staff for their cooperation and commitment to sound financial practices.

Ed Teller, Supervisory Committee Chairman

The Supervisory Committee welcomes your suggestions, comments, or concerns, and may be contacted by U.S. Mail or by e-mail at the following addresses:

Supervisory Committeec/o Jax Federal Credit UnionP.O. Box 551321Jacksonville, Florida 32255-1321supervisory@jaxfcu.org

Ed TellerChairman

Dan LonghiMember

Joe PutzSecretary

Sylvia LudwigMember

Joan Kane AguilarMember

2020 SUPERVISORY CoMMITTEE

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FEDERALLY INSURED BY THE NCUAWe do business in accordance with the Federal Fair Housing

Law and The Equal Credit Opportunity Act.

904-475-8000www.jaxfcu.org

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